Which behaviors lead to emotional and financial confidence and satisfaction?
To determine this, the Guardian Life Insurance Co. of America surveyed 4,971 workers age 18 and older working full time or part time, never retired, with household incomes of $50,000 or more for its Study of Financial and Emotional Confidence.
“The results reinforce what many people already know at a gut level: that an individual’s overall life satisfaction and well-being is inextricably linked with his or her financial well-being,” the study states.
According to the study, 79% of working Americans surveyed reported serious stress-based concerns about their lives — with finances being a major driver of stress — while only 21% are confident about their current behaviors and future prospects.
If the 79% who lack confidence adopted some of the attitudes and behaviors of the 21% who are confident, they potentially could see their stress levels — both financial and otherwise — decrease and their confidence rise.
The study finds that there are specific “model behaviors” that confident planners exhibit. The study breaks it down into four particular behaviors:
The study finds that the survey respondents who lived within set means and had a written financial plan with specific objectives were more confident.
According to the study, 37% of those surveyed have a written financial plan. However, the study also finds that many of these plans lack core elements.
When it comes to planning, confident planners practice staying within their means and are much more focused on the long term than the short-term. They also have a long-term financial plan with clear, attainable goals.
However, nearly two-thirds of Americans surveyed did not describe themselves as being good at living within their means.
“Proper planning can help individuals get on track financially now and in the future,” the study states. “Having a written financial plan and reviewing it annually is a sound strategy.”
The study finds that only a third or fewer of workers have a solid understanding of many common financial products.
“There is a correlation between lack of financial literacy and financial product understanding,” the study states. “By answering (and asking) the right questions, actively listening, and increasing individual knowledge, behaviors and priorities will begin to align.”
Those that were deemed confident planners show an above-average understanding of financial products like investments, all types of insurance and annuities. They also know how much money they will need in retirement to cover expenses apart from health care. They also understand concepts such as budgeting, risk tolerance and asset allocation.
In order to move from concerned to confident, individuals would be advised to own diverse and appropriate products, according to the study.
“Solution-oriented ownership of both protection and investing products is part of a well-thought-out wealth management plan for the future,” the study states.
According to the study, 76% of those surveyed have a workplace retirement savings plan, such as a 401(k). Half own individual stocks and bonds, and 47% own mutual funds.
Comparatively, only 25% hold annuities and only18% have 529 college savings plans.
The study finds that confident planner have above-average ownership across a spectrum of products that they know will help them achieve their financial — and life — priorities such as: mutual funds, individual stocks and bonds, annuities, and various types of life, disability and business insurance.
4. Strategic Relationship
Having a go-to resource, like a financial advisor, to rely on is a major factor in having financial confidence, according to the study.
The study finds that 47% is average percentage of Americans working with a financial advisor – compared with 64%, which is the average percentage of confident planners working with a financial advisor.
This shows that confident planners are more likely to have a strategic relationship with an advisor that they trust to be their financial coach. They’re also more likely to rely on their financial advisor for strategies to generate retirement income, as well as create a holistic financial plan with their advisor.
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